Warning of ‘unprecedented challenges’, National Treasury officials have proposed drastic steps to sharply reduce government spending.
According to the Sunday Times, the proposals are contained in a document drawn up following a meeting of the Cabinet last month at which ‘ministers were warned of the government’s desperate financial position and dwindling tax revenue’.
The newspaper says the proposals follow warnings from opposition parties and mainstream economists that the Government is living beyond its means, while the economy stutters and revenue collection stalls.
It adds that the document is ‘especially explosive’, coming as it does ahead of elections next year ‘when the government will face populist pressures to ramp up spending to make good on its promises to the electorate’.
BusinessTech reports that Treasury data this week showed that the budget moved to a deficit of R143.8 billion for July, the largest since at least 2004, and wider than the R115.5 billion forecast by economists.
It said economists were also sounding the alarm on the full-year outlook, with South Africa’s fiscal deficit for this year expected to exceed the budget set by Finance Minister Enoch Godongwana by some margin.
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